This office has recently completed an audit of IBEW160 under the Compliance Audit
Program (CAP) to determine your organization's compliance with the provisions the of the
Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). As discussed
during the exit interview with you, Business Manager Thomas Koehler, Treasurer
Shawn Daly, and CPA Charlie Marini on December 6,2007, the following problems
were disclosed during the CAP. The matters listed below are not an exhaustive list o
all possible problem areas since the audit conducted was limited in scope.

Recordkeeping Violations

Title II of the LMRDA establishes certain reporting and recordkeeping requirements.
Section 206 requires, among other things, that labor organizations maintain adequate
records for at least five years by which each receipt and disbursement of funds
as all account balances, can be verified, explained, and clarified. As a
general rare labor wel ass organizations must maintain all records used or received in the course of union
business.

For disbursements, this includes not only original bills, invoices, receipts, vouchers, and
applicable resolutions, but also documentation showing the nature of the union
business requiring the disbursement, the goods or services received, and the identity of
the recipient(s) of the goods or services. In most instances, this documentation
requirement can be satisfied with a sufficiently descriptive expense receipt or invoice. If
an expense receipt is not sufficiently descriptive, a union officer or employee should
write a note on it providing the additional information. For money it receives, the labor
organization must keep at least one record showing the date, amount, purpose, and
source of that money. The labor organization must also retain bank records for all
accounts.

The audit of Local 160's 2005 records revealed the following recordkeeping violations:

1. General Reimbursed Expenses

The Labor Organization Annual Report (Form LM-2) filed by Local 160 for its fiscal
year ending December 31,2005 reports in Column f (Disbursements for Official
Business) of Schedules 11 (All Officers and Disbursements to Officers) and 12
(Disbursements to Employees) disbursements totaling more than $100,000.
However, Local 160 did not retain adequate documentation for many meal and
other reimbursed expenses incurred by Business Manager Koehler and the
business representatives. As an example, Business Representative James Anderson
was reimbursed for six car wash expenses he recorded on expense reports totaling
more than $80 in October of 2005. However, no receipts were retained for those
expenses. As another example, Business Manager Koehler did not retain receipts
for expenses totaling more than $2,500.

Records retained in support of meal expenses did not always include written
explanations of union business conducted or the names and titles of the persons
incurring the restaurant charges. For example, Business Representative Daryl
Tindle was reimbursed $159.80 for a meal at Jax Cafe in Minneapolis on Friday
November 4,2005. The receipt notes that seven people were present, but the
receipt does not note the names of the individuals present or the purpose of the
expense. Union records of meal expenses must include written explanations of the
union business conducted and the full names and titles of all persons who incurred
the restaurant charges. Also, the records retained must identify the names of the
restaurants where the officers or employees incurred the meal expense.

As noted above, labor organizations must retain original receipts, bills, and
vouchers for all disbursements. The president and treasurer (or corresponding
principal officers) of your union, who are required to sign your union's LM report,
are responsible for properly maintaining union records.

2. Authorization for expenses

Local 160 has a written policy that identifies authorized amounts to be paid for
union personnel who travel to attend conferences and conventions. However, the
Local has no written policies that identify the circumstances under which meals
and similar expenses not related to attending conferences or conventions are
authorized to be incurred. Mr. Koehler advised me that he uses his own judgment
in determining which types of expenses may be paid by Local 160, and in the case
of meal expenses, he has advised union personnel that only "legitimate business
expenses" should be claimed.

The audit revealed that union personnel frequently incurred meal expenses in the
Twin Cities area. For instance, in November and December of 2005 either the
business manager or a business representative was reimbursed for meals in
Minneapolis on every working day (Monday-Friday) except November 23,24, and
25, and December 6,20,23,26,30. In most cases, adequate documentation was not
retained to enable OLMS to verify that the expenses were necessary for conducting
union business.

Article XVII of the International Constitution identifies the duties of local union
officers. Article XVII, Section 8 identifies the duties of the business manager.
Section 4 identifies the duties of the financial secretary. However, neither
Article XVII nor the local bylaws specify which officer has the duty to authorize
expenses. Section 201(a) of the LMRDA states that "every labor organization shall
adopt a constitution and bylaws and shall file a copy thereof with the Secretary.. . ." In addition to filing a constitution and bylaws, labor organizations must also
submit a report detailing, among other things, "detailed statements, or references
to specific provisions of documents filed under [Section 201(a)] which contain such
statements, showing the provisions made and procedures followed with respect to
. . .authorization for disbursement of funds of the labor organization.. . ."

In order to meet the reporting requirement of Section 201(a), Local 160 filed an
LM-1 report for fiscal year ending December 31,1990. Instead of submitting a
detailed statement along with the report that explained Local 160's practice and
procedure regarding the authorization of disbursements, Local 160 indicated on
the LM-1 that specific provisions involving the authorization for disbursement of
labor organization funds could be found in the local's constitution and bylaws.
However, as indicated above, no specific authorization for union expenses could
be found in the local's bylaws or constitution.

In order to comply with Section 201(a), Local 160 must report the provision made
and procedures followed with respect to the authorization of disbursement of
funds. The information may be incorporated into Local 160's bylaws or filed with
an amended Labor Organization Information Report (Form LM-1).

In addition, OLMS strongly recommends that Local 160 establish written
guidelines that identify the circumstances and the types and amounts of expenses
that are authorized to be incurred. Written guidelines can help ensure effective
internal controls and safeguard union assets.

3. Inadequate Mileage Logs

Local 160 did not maintain records necessary to verify the accuracy of the
information reported in Schedules 11 (All Officers and Disbursements to Officers)
and 12 (Disbursements to Employees) of the LM-2. Local 160 appears to have
included some amounts for automobile expenses in Column (F) of Schedule 11 (All
Officers and Disbursements to Officers) and Schedule 12 (Disbursements to
Employees) for the eight union officers and employees who are assigned a union
automobile. However, Local 160 did not maintain records documenting business
versus personal use of the union vehicles.

In the case of Local 160, union personnel retained mileage logs in which they
recorded some amounts of mileage driven. However, the logs maintained do not
sufficiently identify the business purpose of each use. In addition, the audit
revealed instances where union personnel recorded significant mileage driven on
days when they appeared to be on vacation, even though Mr. Koehler advised the
union has an unwritten policy that allows union personnel to use union cars for
personal business on a "limited basis." For instance, according to his mileage logs,
Business Representative James Anderson drove 779 miles conducting union
business on June 6,7,8, and 9. However, Anderson's vacation records show that
he was on vacation June 6 through June 10.

The LM-2 instructions include specific rules for the reporting of automobile
expenses. The union must report operating and maintenance costs for each of its
owned or leased vehicles in Schedules 11 and 12 of the LM-2, allocated to the
officer or employee to whom each vehicle is assigned. For each trip they take
using a union owned or leased vehicle, officers and employees must maintain
mileage logs that show the date, number of miles driven, whether the trip was
business or personal, and, if business, the purpose of the trip.

4. Receipt Records

The union did not maintain records necessary to verify the accuracy of the
information reported in Item 36 (Dues and Agency Fees), Statement B (Receipts
and Disbursements) of the LM-2. Local 160 receives basic dues from all of its
members. In addition, some of the members also pay working dues. The basic
dues are entered into a computerized receipts system called ICS. The working
dues are entered into an Excel spreadsheet. All of the money for a period,
generally around two weeks, is then recorded as a deposit entry in QuickBooks
and is deposited in the bank. A record of each individual check and cash payment
that constitutes a deposit is kept. However, no record that identifies the total
amounts recorded in both ICS and Excel that were eventually posted into
QuickBooks was retained. Therefore, it is impossible to determine when and if all
receipts were deposited in order to verify the figures reported in Statement B.

The ICS system provides a means to help insure all receipts are deposited. The
system allows users to printout daily totals of receipts entered into the system.
However, Local 160 does not run daily reports. To ensure that union assets are
properly safeguarded, OLMS recommends that daily receipt reports be printed
and that those same amounts be recorded on bank deposit tickets or that records be
retained to show that the total amounts posted can be traced to bank deposits.

The proper maintenance of union records is the personal responsibility of the
individuals who are required to file Local 160's LM report. You should be aware that
under the provisions of Section 209(a) of the LMRDA and Section 3571 of Title 18 of the
U.S. Code, willful failure to maintain records can result in a fine of up to $100,000 or
imprisonment for not more than one year, or both. Under the provisions of Section
209(c) of the LMRDA and Section 3571 of Title 18 of the U.S. Code, willful destruction or
falsification of records can result in a fine of up to $100,000 or imprisonment for not
more than one year, or both. The penalties provided in Section 209(c) and Section 3571
of Title 18 apply to any person who caused the violations, not just the individuals who
are responsible for filing the union's LM report.

Local 160's records will be reviewed again within the next year to ensure that all
recordkeeping violations have been corrected.

Reporting Violations

The audit disclosed a violation of LMRDA Section 201(b), which requires labor
organizations to file annual financial reports accurately disclosing their financial
condition and operations. The Labor Organization Annual Report Form LM-2 filed by
Local 160 for fiscal year ending December 31,2005, was deficient in the following areas:

1. Liability Reporting

Business Manager Koehler advised that Local 160 employees and officers are
allowed to cash out up to sixty days of unused vacation time. Though this
represents a liability to the union, no corresponding entry was found on Schedule
10 (Other Liabilities). The audit revealed that Local 160 officers and employees
had as many as 387 unused vacation days that were carried over from 2005 to 2006
that could be cashed out under the local's policies.

2. Failure to File Bylaws

The audit disclosed a violation of LMRDA Section 201(a), which requires that a
union submit a copy of its revised constitution and bylaws with its LM report
when it makes changes to its constitution or bylaws. Local 160 amended its
constitution and bylaws in 1992, but did not file a copy with its LM report for that
year. Local 160 has now filed a copy of its constitution and bylaws.

3. Benefit Payments

Bookkeeper Rose Eiden received eleven monthly checks for $720 and one for $760
during 2005. These payments were made in lieu of receiving health and welfare
benefits from Local 160. Since Ms. Eiden was not required to submit any
documentation substantiating the fact that the money received was used to
purchase her own benefits, these payments should not be included in Schedule 20
(Benefits) as they have been reported. Instead, these payments must be included in
Schedule 12 (Disbursements to Employees). If the payments are intended to
compensate her additional money because the local does not provide her benefits,
the payments should be reported in Column D (Salary).

I am not requiring that Local 160 file an amended LM report for 2005 to correct the
deficient items, but Local 160 has agreed to properly report the deficient items on all
future reports it files with OLMS.

Other Issues

1. Delinquency of Vouchers

Business Representative Lynnie Martin submits his expense vouchers and receipts
for reimbursement many months after the expenses were incurred. For example,
Mr. Martin was not reimbursed for June, July, August, and September 2005
expenses until February of 2006. Since validating expenses that occurred many
months prior can be more difficult than validating more recent expenditures,
OLMS recommends that expense reimbursement claims be submitted in a timely
fashion.

2. Following the Policies

In a couple instances, Local 160 business representatives are not adhering to the
local's policies. For instance, according to Local 160 Executive Board Policies &
Interpretations, local union officers, executive board members, unit officers, and
unit executive committee members receive an attendance fee for attending local
union executive board and unit executive committee meetings. The payments
were $89.57 per meetings for 2005. According to the same policy, individuals
receiving the payment are not entitled to incur any lodging expense in attendance
of the meetings. However, Mr. Martin received the attendance fee and also
consistently incurred hotel expenses in order to attend executive board meetings.

Similarly, Local 160 also has a policy regarding conference and convention
expenses. The policy states that delegates to conventions or conferences shall
receive $80 in order to cover, "Miscellaneous, registration, tips, etc." In addition
they receive hotel, airfare, $60 per day, $60 for taxi fare at destination, $10 per day
taxi fare at conference, $10 per day laundry (if gone over 3 days), and $15 per day
airport parking. Based on this policy, those in attendance at the Baltimore Utility
Conference received $520 in addition to their hotel and airfare expenses. Business
Representative Daryl Tindle was one of the individuals who attended the
conference. Even though he received the $520, he was also reimbursed $130 for a
Supershuttle at the conference and $41.50 for parking at the Minneapolis airport.
According to the policy, both of these expenses should have been covered in the
$520 he received.

3. Vacation

According to Business Manager Koehler, IBEW 160 officers and business
representatives follow the Xcel Collective Bargaining Agreement in regard to
vacation accrual and payout. Based on the Xcel Agreement, employees are
allowed to accrue a maximum of 60 days of vacation. However, IBEW 160
vacation records show that the business manager and some of the business
representatives are accruing more than 60 days of vacation. For instance, Business
Representative Martin started 2005 with over 108 days of vacation according to
vacation records. In addition, though Local 160 officer and employees are allowed
to cash out up to sixty days of vacation at the time they leave the local, this policy
was not found in the Xcel Collective Bargaining Agreement and was not
documented elsewhere. Consequently, OLMS strongly recommends that the
vacation policy regarding accrual and payout be documented for clarification.

I want to extend my personal appreciation to IBEW 160 for the cooperation and
courtesy extended during this compliance audit. I strongly recommend that you make
sure this letter and the compliance assistance materials provided to you are passed on
to future officers. If we can provide any additional assistance, please do not hesitate to
call.